FORATOM priorities for a European Energy Union
Enhancing nuclear’s contribution to a sustainable, competitive and reliable energy mixContext:
FORATOM welcomes the intention of the European Commission (EC) to create a European Energy Union and its efforts to highlight the crucial role energy plays in the wider economic strategy for Europe. Maroš Šefčovič, the new Vice-president for Energy Union, outlined in a speech at the European Parliament (EP) on 27 January the five priorities of an Energy Union: enhance security of energy supply; build a single internal energy market; increase energy efficiency; decarbonise the economy, and boost research and innovation. The EC should publish on 25 February 2015 its Proposal for a Strategic Framework for the Energy Union listing the key actions to be taken in order to achieve these priorities. The Proposal should be discussed during the European Summit on 19-20 March 2015. The Latvian EU Presidency will hold a high-level ministerial conference on 6 February 2015 in Riga in which FORATOM Director General, Jean-Pol Poncelet, has been invited to speak about the decarbonisation of the EU energy mix.
FORATOM believes that EU energy policy should be built upon the three pillars of sustainability, competitiveness and security of supply, to which nuclear, as a competitive, reliable and base-load source of energy, will continue to contribute. The term ‘Energy Union’ should serve as an umbrella that includes recent and future reforms in the areas of climate and energy, such as, for example, 2030 policy, the Emissions Trading System (ETS) reform and the completion of the internal electricity market.
FORATOM Position Paper highlights what the European nuclear industry believes should be the Energy Union’s main priorities and makes recommendations on how to achieve them:
1. Securing energy supply
Security of energy supply is enhanced by reducing dependence upon fossil fuels from external energy sources, and diversifying the energy mix. Nuclear power, which provides nearly 30% of EU’s electricity supply, is a key contributor to the security of the overall generation system.
- promote a balanced energy mix that recognises the crucial role of base-load electricity supply, the need for flexible generation and the impact of increasing the contribution from intermittent energy technologies
- publish an “Illustrative Programme for Nuclear Energy” (PINC) in 2015, which will enable the EC to build a complete picture of how it intends to include nuclear while ensuring security of energy supply
2. Building an internal energy market that enables a competitive and sustainable EU economy
It is clear that the current market arrangements do not encourage long-term investment in low carbon technologies, which require high up-front capital financing at acceptable risk to investors. Low-carbon technologies must be allowed to compete fairly on price without any specific subsidies, taxes or levies, thus achieving emissions reductions in the most cost-effective way and promoting industrial competitiveness.
- enable an effective investment environment for all low-carbon technologies, which includes innovative financing mechanisms such as long-term contracts, contracts for difference, shared ownership/off-take schemes, or other viable market models
- facilitate investment in low-carbon capital intensive projects through EU-based institutions (European Investment Bank – EIB, European Fund for Strategic Investments – EFSI)
- encourage the EC to publish a PINC indicating nuclear energy production targets and all the types of investment required for meeting them in line with the EURATOM Treaty, which calls on the EC to facilitate coordinated development of investment in the nuclear field
“If it comes to the Hinkley case, it was a case, which was economically analysed by Chief Economists in DG Competition and by the respective services. There was clear proof that here we are talking about a market failure and therefore the state aid was guaranteed. If you ask me whether I voted for this measure: yes, I voted in favour of it, because I found it fully compatible with the state aid rules.” Maroš Šefčovič, Vice-President for Energy Union, at his hearing at the EP on 20 October 2014
3. Moderating demand
Consumers must be encouraged to reduce their energy consumption during peak hours through demand management and energy efficiency. As consumers’ demand becomes more constant, the contribution of base-load nuclear power will be further highlighted.
- encourage the adoption of innovative smart technology to empower customers to manage their energy use more efficiently
- create incentives to improve demand management
4. Decarbonising the energy mix
Nuclear power is a significant means of limiting greenhouse gas (GHG) emissions in the power generation sector. Nuclear energy produces virtually no GHG emissions at the point of generation and accounts for over half of EU’s low-carbon electricity. There are no credible scenarios whereby the EU can meet its long-term objectives in terms of CO2 emission reduction for 2050 without nuclear power. It is not effective to replace nuclear with other forms of low-carbon energy, such as renewables, especially if the back-up for renewables leads to higher CO2 emissions.
- bring forward to 2017 the proposed ETS reform’s entry into force (Market Stability Reserve (MSR)) instead of postponing it to the early 2020s
- allow Member States to set their own national carbon floor prices or use other means to incentivise investment in low-carbon technologies until an adequate carbon price provides an effective stimulus for investments in these technologies
5. Boosting research and innovation
Current EU nuclear power research programmes are contributing to a broad spectrum of scientific areas and new technologies (IT, control systems, metallurgy, remote operations, medical applications, etc.), thus maintaining Europe’s leadership in these fields. Research is required to develop the next generation of fission reactors, innovative designs and small modular reactors and to create new techniques and equipment for decommissioning nuclear facilities, radioactive waste minimization, management and disposal.
- keep EU nuclear fission research funding at a level commensurate with the potential of nuclear to make a major sustainable contribution to future low-carbon energy mix and to maintain Europe’s leadership in the nuclear sector